Distribution: Prepared By: Group 3

DISTRIBUTION Prepared by:
Group 3
DISTRIBUTION
It is the process of making a product or

service available for the consumer or business
user who needs it.
Detailed logistics, transportation,
warehousing, storage, inventory management
as well as channel management including
selection of channel members and rewarding
distributors.
DISTRIBUTION CHANNELS
Consists of the physical access point where

the product is provided to customers and the
methods of transporting or storing goods
before making them available for clients.
It is a chain of businesses or intemediaries
through which a good or service passess until
it reaches the final buyer or the end
consumer.
THINGS TO DISCUSS ABOUT
DISTRIBUTION CHANNELS
Structure of Distribution Channels

Functions of Distribution Channels
Choice of Distribution Channels
Nature of Supply Chain Management
Key Processes of Supply Chain
Management
Logistics Components of the Supply
Chain
STRUCTURE OF DISTRIBUTION CHANNELS
A DISTRIBUTION CHANNEL in marketing refers to the

path or route through which goods and services travel
to get from the place of production or manufacturer to
the final users.
B u s i n e s s - to- B u s i n e s s ( B 2 B ) distribution occurs

between a producer and industrial users of raw
materials needed for the manufacture of finished
products.
B u s i n e s s - to- c u s tom e r ( B 2 C ) distribution occurs

between the producer and the final user.
Producer to Consumer
• The producer sells the goods or provides the

service directly to the consumers no
intermediary, such as wholesaler, agent or
retailer. The consumer goes directly to the
producer to buy the product without going
through any other channel.
4 MAIN TYPES OF MARKETING CHANNELS
 Producer to Retailer to Consumer
• Purchases are made by the retailer from the

producer or manufacturer and then the
retailer sells the merchandise to the
consumer.
Producer to Wholesaler/Distributor to
Customer
• Wholesalers buy the products from the

manufacturer/distributor and sell them to the
consumer.
Producer to Agent/Broker to Wholesaler or
Retailer to Customer
• This distribution channel involves more than

one intermediary before the product gets into
the hands of the consumer.
FUNCTION OF DISTRIBUTION CHANNEL
• Distribution channel are notable because they

represent the first significant manifestation of a
market framework.
1. I n f orm a t i o n p r ovi d er- a role providing information
about the market to manufacturer.
2. Pr i c e s t a b i l i t y - maintaining price stability in the

market is another task middlemen does.
3. Pr o m o ti o n - promoting the products/ territory is

another function that middlemen perform.
4. F i n a n c i n g - providing the needed in working capital in the
form of advance payments for goods and services.
5. T i t l e - most middlemen take the title of the goods, services

and trade in their own name.
6. H e l p i n p r o d u c t i o n f u n c t i o n - the producer can focus on the

production leaving the marketing problem.
7. M a t c h i n g d e m a n d a n d s u p p l y - the principle function od

intermediaries is to assemble the goods from many producers.
8. P r i c i n g - In pricing a product, the producer should
encourage the suggestion from the middlemen who are very
close to the final users.
9. S t a n d a r d i z i n g t r a n s a c t i o n - the distribution is standardized

through the marketing channel so that the consumer do not
confer with the seller.
10. M a t c h i n g b u y e r s a n d s e l l e r - the most critical of the

marketing channel members is to match the needs of the
buyers and seller.
CHOICE OF DISTRIBUTION CHANNELS
There are three considerations in the choice of distribution

channels intermediaries
1. O f f e r t h e b e s t c o v e r a g e o f t h e t a r g e t m a r k e t
• This need knowing the density of the number of stores in a
specific place.
There three degrees of distribution density that are present in
the market namely:
A. Intensive distribution
• The company tries to place its products and services
possibly in many outlets
B. Exclusive distribution
• Only one outlet carries the company's products in a particular
place
C. Selective distribution
• The company picks a few retail outlets in a particular place to
distribute its products
2. B e s t s a t i s f y t h e b u y i n g r e q u i r e m e n t s
• The channels and intermediaries need to satisfy at least some
of the interest buyers would desire to be fulfilled when they buy
a company products or service
A. Information
• A vital requirements when buyers have restricted
knowledge or wants particular data regarding a
product or service
B. Convenience
• Channel and intermediaries must be proximate or
during time to reach is at a minimum
C. Variety
• Reflects buyers interests to have a numerous choices
of competing and complementary products
D. Attendant service
• Requirement for intermediaries of large home
appliances that needs delivery, installation and
credit
3. B e m o s t l u c ra t i ve
• Being profitable is determined by profit margins
earned for each channel member and for the channel
as a whole.
NATURE OF SUPPLY CHAIN
MANAGEMENT
 A supply chain consists of the various firms included
in executing the activities needed to produce and
transport a product or service to consumers or
industrial users.
 Supply Chain Management (SCM) is the supervision of
materials, information, and finances as they more in a
process from supplier to manufacturer to whole seller
to retailer to consumer.
 Supply chain management is a shared approach to
getting goods from manufacturer to consumers. The
main goals focus on shared efficiency, optimized
transportation and utilization, quality improvement and
long-term stability.
1. SHARED EFFICIENCY
Managing inventory, transportation and

logistics are difficult and expensive for
companies that do not have an effective
system.
 Efficiency in getting goods to the right place
at the right time minimizes inventory costs
and meets customer demand.
2. OPTIMIZED TRANSPORTATION AND
LOGISTICS
The umbrella concept of supply chain
management encompasses transportation and
logistics.
In an independent business environment,
each company is in charge for its role in
ordering, shipping and transporting goods.
3. QUALITY IMPROVEMENT
Getting consumers the best value is a shared

goal of supply chain partners. To closely
connect is the objectives of perpetual quality
improvement.
 Quality improvement objectives help all
channel members win because consumers
recognize value.
4. LONG-TERM STABILITY
 Through structuring strong trusting supply

chain relationships and working toward best
practices in distribution, companies aim for
long-term stability.
 Shared planning, coordination and
distribution activities stretch the risks of
business decisions across numerous
companies.
KEY PROCESS OF SUPPLY CHAIN
• Business processes consist of interlinked

activities that stretch across firms in the
supply chain. They are the key areas that
some or all of the involved firms are
continuously working to reduce costs and
generate earnings for everyone in the
supply chain management.
THERE ARE EIGHT CRITICAL BUSINESS PROCESSES
IN WHICH SUPPLY CHAIN MANAGERS MUST FOCUS:
 Customer Relationship Management- allows companies to

prioritize their marketing focus on different customer groups
based on each group's long-term value to the company or
supply chain

 Customer Service Management- it is a multi-company, unified
system of responding to customers' complaints, concerns,
questions, or comments.
 Demand Management- this process tries to align supply and

demand throughout the supply chain by foreseeing customer
requirements and creating an action plan before actual
purchasing of customer
Order Fulfillment- engages in generating, filling, delivering
and providing on-the-spot service for customer orders.

Manufacturing Flow Management- ensures that firms in the
supply chain have the necessary resources to produce with
flexibility and more products in a multi-stage production
process.

Supplier Relationship Management- provides structural
support for developing and maintaining good relationships
especially with highly- valued suppliers in order to gain
performance and advantages.

Product Development and Commercialization-
facilitates the joint development and marketing
of new products and services among a group of
supply chain partner firms.
Returns management- enables firms to manage

volume of returned product efficiently while
minimizing related costs.
LOGISTIC COMPONENT OF SUPPLY CHAIN
logistic is the the strategic managing of

the efficient flow and storage of raw
materials, In process inventory and
finished goods from the point of origin to
point of consumption.
THE SUPPLY CHAIN ENTAILS A NUMBER OF
INTERCONNECTED LOGISTICAL COMPONENTS WHICH
ARE:
1. S o u r c i n g a n d p r o c u r e m e n t - the goal of sourcing and

procurement activities is to lessen the cost of raw materials
and supplies.

2. P r o d u c t S c h e d u l i n g - Traditionally product starts when
inventory levels become low or the forecast calls for additional
product to be manufactured.

3. O r d e r P r o c e s s i n g - it processes the requirements of the
customer and sends the information into the supply chain
through the logistic information system then to the warehouse.
4. I n v e n t o r y C o n t r o l - this system develops and maintains
enough variety of materials or products to meet a
manufacturer’s or consumer’s demand. Inventory decisions
have huge impact on the supply chain costs and the level of
service provided for raw material and finished goods.
5. W a r e h o u s i n g a n d m a t e r i a l s h a n d l i n g - storage aids
manufacturers manage supply and demand or production and
consumption.
6. T r a n s p o r t a t i o n - this concerns the decision on the mode of

transportation that will move the goods from the supplier to
producer and from producer to customers.
FIVE COMMONLY USED MODES OF
TRANSPORTATION ARE:
Railroads
Motor carriers
Pipelines
Water transportation
Airways
CRITERIA IN THE SELECTION OF
TRANSPORTATION MODES ARE:
A. C o st - the total amount of charge by carrier to move
the product from the point of origin to destination.

B. T r a n s i t t i m e - the total time for the carrier to pick-
up, delivery, handling, and movement from point of
origin to destination

C. R e l i a b i l i t y - consistency of the carrier on delivering
the goods on time and satisfactory condition to
D. Ca p a c i ty - the ability of the carrier to provide
applicable equipment and conditions for moving goods
like those that must be transported in a controlled
environment

E. A c c e s s i b i l i t y - the ability of the carrier to transport
the goods over a particular route or network

F. T r a c e a b i l i ty -the relative ease that a shipment of
goods can be located and transferred.

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DISTRIBUTION Prepared by:

It is the process of making a product or

Consists of the physical access point where

Structure of Distribution Channels

A DISTRIBUTION CHANNEL in marketing refers to the

B u s i n e s s - to- B u s i n e s s ( B 2 B ) distribution occurs

B u s i n e s s - to- c u s tom e r ( B 2 C ) distribution occurs

• The producer sells the goods or provides the

 Producer to Retailer to Consumer

• Purchases are made by the retailer from the

• Wholesalers buy the products from the

• This distribution channel involves more than

• Distribution channel are notable because they

2. Pr i c e s t a b i l i t y - maintaining price stability in the

3. Pr o m o ti o n - promoting the products/ territory is

5. T i t l e - most middlemen take the title of the goods, services

6. H e l p i n p r o d u c t i o n f u n c t i o n - the producer can focus on the

7. M a t c h i n g d e m a n d a n d s u p p l y - the principle function od

9. S t a n d a r d i z i n g t r a n s a c t i o n - the distribution is standardized

10. M a t c h i n g b u y e r s a n d s e l l e r - the most critical of the

There are three considerations in the choice of distribution

Managing inventory, transportation and

Getting consumers the best value is a shared

 Through structuring strong trusting supply

• Business processes consist of interlinked

 Customer Relationship Management- allows companies to

 Demand Management- this process tries to align supply and

Returns management- enables firms to manage

logistic is the the strategic managing of

1. S o u r c i n g a n d p r o c u r e m e n t - the goal of sourcing and

6. T r a n s p o r t a t i o n - this concerns the decision on the mode of

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